What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-11-25 compared with 2023-12-11 · 291 added, 247 removed, 1002 unchanged (35% of the section changed)

5 unchanged sentences

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Blue Bird Corporation (the “Company”) and subsidiaries as of September 30, 2023 and October 1, 2022, the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity (deficit), and cash flows for each of the three years in the period ended September 30, 2023, and the related notes and schedule (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2023 and October 1, 2022, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2023 , in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated December 11, 2023 expressed an unqualified opinion thereon.

We have audited the accompanying consolidated balance sheets of Blue Bird Corporation (the “Company”) as of September 28, 2024, and September 30, 2023, the related consolidated statements of operations, comprehensive income (loss), stockholders’ (deficit) equity, and cash flows for each of the three years in the period ended September 28, 2024, and the related notes and schedule (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 28, 2024 and September 30, 2023, and the results of its operations and its cash flows for each of the three years in the period ended September 28, 2024 , in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of September 28, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated November 25, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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Atlanta, Georgia

December 11, 2023

November 25, 2024

Report of Independent Registered Public Accounting Firm

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 28, 2024, based on the COSO criteria .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of September 30, 2023 and October 1, 2022, the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity (deficit), and cash flows for each of the three years in the period ended September 30, 2023, and the related notes and schedule and our report dated December 11, 2023 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of September 28, 2024 and September 30, 2023, the related consolidated statements of operations, comprehensive income (loss), stockholders’ (deficit) equity, and cash flows for each of the three years in the period ended September 28, 2024, and the related notes and schedule and our report dated November 25, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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Atlanta, Georgia

December 11, 2023

November 25, 2024

BLUE BIRD CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands except for share data) September 30, 2023 October 1, 2022

(in thousands except for share data) September 28, 2024 September 30, 2023

Current assets

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Intangible assets, net 43,554 45,424

Equity investment in affiliate 17,619 10,659

Equity investment in affiliate(s)

32,089 17,619

Deferred tax assets 2,399 2,182

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Stockholders' equity

Preferred stock, $ 0.0001 par value, 10,000,000 shares authorized, 0 issued with liquidation preference of $ 0 at September 30, 2023 and October 1, 2022

Common stock, $ 0.0001 par value, 100,000,000 shares authorized, 32,165,225 and 32,024,911 shares outstanding at September 30, 2023 and October 1, 2022, respectively

Preferred stock, $ 0.0001 par value, 10,000,000 shares authorized, 0 issued with liquidation preference of $ 0 at September 28, 2024 and September 30, 2023

Common stock, $ 0.0001 par value, 100,000,000 shares authorized, 32,268,022 and 32,165,225 shares outstanding at September 28, 2024 and September 30, 2023, respectively

Additional paid-in capital 185,977 177,861

Accumulated deficit ( 55,700 ) ( 79,512 )

Retained earnings (accumulated deficit)

Accumulated other comprehensive loss ( 26,416 ) ( 31,884 )

Treasury stock, at cost, 1,782,568 shares at September 30, 2023 and October 1, 2022

( 50,282 ) ( 50,282 )

Treasury stock, at cost, 0 and 1,782,568 shares at September 28, 2024 and September 30, 2023, respectively

Total stockholders' equity

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( 4,394 ) ( 8,307 ) 2,947

Loss on debt modification ( 537 ) ( 632 ) ( 598 )

Loss on debt refinancing or modification

( 1,558 ) ( 537 ) ( 632 )

Income (loss) before income taxes

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( 33,228 ) ( 8,953 ) 11,451

Equity in net income (loss) of non-consolidated affiliate

Equity in net income (loss) of non-consolidated affiliate(s)

11,839 6,960 ( 4,159 )

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Share-based compensation expense 8,609 4,173 3,690

Equity in net (income) loss of non-consolidated affiliate

Equity in net (income) loss of non-consolidated affiliate(s)

( 11,839 ) ( 6,960 ) 4,159

Loss (gain) on disposal of fixed assets 64 15 ( 679 )

Dividend from equity investment in affiliate(s)

Loss on disposal of fixed assets

Impairment of fixed assets — — 1,354

Lower of cost or net realizable value loss — — 8,752

Deferred income tax expense (benefit)

Deferred income tax (benefit) expense

( 1,674 ) 8,065 ( 11,071 )

Amortization of deferred actuarial pension losses 687 1,195 3,768

Loss on debt modification 537 632 598

Loss on debt refinancing or modification

1,558 537 632

Changes in assets and liabilities:

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Cash paid for fixed assets $ ( 15,263 ) $ ( 8,520 ) $ ( 6,453 )

Proceeds from sale of fixed assets — — 903

Equity investment in affiliate(s) (Note 17)

Total cash used in investing activities $ ( 15,815 ) $ ( 8,520 ) $ ( 6,453 )

Cash flows from financing activities

Revolving credit facility borrowings $ 45,000 $ 135,000 $ 117,000

Revolving credit facility borrowings (Note 8)

$ 36,220 $ 45,000 $ 135,000

Revolving credit facility repayments ( 36,220 ) ( 65,000 ) ( 160,000 )

Term loan repayments ( 19,800 ) ( 14,850 ) ( 9,900 )

Term loan borrowings - new credit agreement (Note 8)

Term loan repayments (Note 8)

( 135,550 ) ( 19,800 ) ( 14,850 )

Principal payments on finance leases ( 589 ) ( 570 ) ( 1,132 )

Cash paid for debt costs ( 3,272 ) ( 2,751 ) ( 2,476 )

Cash paid for debt costs (Note 8)

( 3,128 ) ( 3,272 ) ( 2,751 )

Sale of common stock (Note 13)

Cash paid for common stock issuance costs (Note 13)

Repurchase of common stock in connection with repurchase program (Note 13)

( 9,938 ) — —

Repurchase of common stock in connection with stock award exercises ( 1,178 ) ( 376 ) ( 1,708 )

9 unchanged sentences

Cash paid or received during the period:

Interest paid, net of interest received $ 15,049 $ 15,171 $ 11,568

Income tax (received) paid, net of tax refunds ( 29 ) ( 79 ) 31

Interest paid

$ 9,932 $ 16,053 $ 15,180

Interest received

( 3,783 ) ( 1,004 ) ( 9 )

Income tax paid (received), net of tax refunds

29,401 ( 29 ) ( 79 )

Non-cash investing and financing activities:

Accrued capital additions to property, plant and equipment and other current assets for capitalized intangible assets $ 941 $ 948 $ 587

Cashless exercise of stock options — — 2,299

Changes in accounts payable for capital additions to property, plant and equipment

$ 721 $ 941 $ 948

Right-of-use assets obtained in exchange for operating lease obligations 1,682 626 1,424

1 unchanged sentence

Finance lease obligations removed due to non-renewal of lease — — 2,593

Warrants issued for equity investment in affiliate (Note 17)

The accompanying notes are an integral part of these consolidated financial statements.

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(in thousands except for share data) Shares Par Value Additional Paid-In-Capital Shares Amount Accumulated Other Comprehensive Loss

Accumulated Deficit Shares Amount Total Stockholders' (Deficit) Equity

(Accumulated Deficit) Retained Earnings

Shares Amount Total Stockholders' (Deficit) Equity

Balance, October 2, 2021 27,205,269 $ 3 $ 96,170 — $ — $ ( 44,794 ) $ ( 33,753 ) 1,782,568 $ ( 50,282 ) $ ( 32,656 )

Sale of common stock (Note 13)

4,687,500 — 74,798 — — — — — — 74,798

Restricted stock activity 116,556 — ( 1,688 ) — — — — — — ( 1,688 )

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Balance, October 1, 2022 32,024,911 $ 3 $ 173,103 — $ — $ ( 41,930 ) $ ( 79,512 ) 1,782,568 $ ( 50,282 ) $ 1,382

Private Placement (Note 13)

4,687,500 — 74,798 — — — — — — 74,798

Restricted stock activity 79,545 — ( 376 ) — — — — — — ( 376 )

1 unchanged sentence

Share-based compensation expense — — 4,015 — — — — — — 4,015

Net loss — — — — — — ( 45,759 ) — — ( 45,759 )

— — — — — — 23,812 — — 23,812

Other comprehensive income, net of tax — — — — — 10,046 — — — 10,046

Balance, October 1, 2022 32,024,911 $ 3 $ 173,103 — $ — $ ( 41,930 ) $ ( 79,512 ) 1,782,568 $ ( 50,282 ) $ 1,382

Balance, September 30, 2023 32,165,225 $ 3 $ 177,861 — $ — $ ( 31,884 ) $ ( 55,700 ) 1,782,568 $ ( 50,282 ) $ 39,998

Issuance of warrants (Note 17)

— — 7,416 — — — — — — 7,416

Restricted stock activity 65,495 — ( 1,178 ) — — — — — — ( 1,178 )

Stock option activity 239,120 — 3,785 — — — — — — 3,785

Share repurchase and retirement (Note 13)

(201,818) — — — — — (9,938) — — (9,938)

Treasury stock retirement (Note 13)

— — (10,373) — — — (39,909) (1,782,568) 50,282 —

Share-based compensation expense — — 8,466 — — — — — — 8,466

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The Company’s fiscal year ends on the Saturday closest to September 30 with its quarters consisting of thirteen weeks in most years.

The fiscal years ended September 30, 2023, October 1, 2022 and October 2, 2021 are referred to herein as “fiscal 2023,” “fiscal 2022” and “fiscal 2021,” respectively.

The fiscal years ended September 28, 2024, September 30, 2023 and October 1, 2022 are referred to herein as “fiscal 2024,” “fiscal 2023” and “fiscal 2022,” respectively.

There were 52 weeks in fiscal 2024, fiscal 2023 and fiscal 2022.

Impacts of COVID-19 and Subsequent Supply Chain Constraints on our Business

Towards the end of the second quarter of our fiscal year that ended October 3, 2020 (“fiscal 2020”), the novel coronavirus known as COVID-19 spread throughout the world, resulting in a global pandemic.

Countermeasures taken to address the COVID-19 pandemic included virtual and hybrid schooling in many jurisdictions throughout the United States of America ("U.S.") and Canada.

The uncertainty of when and how schools would open materially affected demand for new buses and replacement/maintenance parts during the second half of fiscal 2020 and first half of fiscal 2021, significantly impacting our business and operations.

Demand for school buses strengthened substantially during the second half of fiscal 2021 as COVID-19 vaccines were administered and many jurisdictions began preparing for a return to in-person learning environments for the new school year that began in mid-August to early September 2021.

However, during this same period of time, the Company, and automotive industry as a whole, began experiencing significant supply chain constraints resulting from, among others, labor shortages;

the lack of maintenance on, and acquisition of, capital assets by suppliers during the extended COVID-19 global lockdowns;

significant increased demand for consumer products containing certain materials required for the production of vehicles, such as microchips, as consumers spent stimulus and other funds on items for their homes;

These supply chain disruptions had a significant adverse impact our operations and results during the second half of fiscal 2021 and all of fiscal 2022 due to higher purchasing costs, including freight costs incurred to expedite receipt of critical components, increased manufacturing inefficiencies and our inability to complete the production of buses to fulfill sales orders.

Impacts of Supply Chain Constraints on our Business

During the second half of our fiscal year that ended October 3, 2020 ("fiscal 2020") and first half of our fiscal year that ended on October 2, 2021 ("fiscal 2021"), the novel coronavirus known as "COVID-19" materially affected demand for new buses and replacement/maintenance parts, significantly impacting our business and operations.

Although demand for school buses strengthened substantially during the second half of fiscal 2021, the Company, and automotive industry as a whole, began experiencing significant supply chain constraints around this same period of time.

These supply chain disruptions had a significant adverse impact our operations and results due to higher purchasing costs, including freight costs incurred to expedite receipt of critical components, increased manufacturing inefficiencies and our inability to complete the production of buses to fulfill sales orders during most of fiscal 2022.

Additionally, Russian military forces launched a large-scale invasion of Ukraine on February 24, 2022, which further exacerbated global supply chain disruptions.

While the Company has no assets or customers in either of these countries, this military conflict significantly impacted our financial results, primarily in an indirect manner since the Company does not sell to customers located in, or source goods directly from, either country.

Specifically, it contributed to increased volatility in a) costs charged by suppliers for the purchase of inventory that is at least partially dependent on resources originating from either of the countries and b) freight costs, both of which negatively impacted the gross profit recognized on sales during the second half of fiscal 2022 and continuing into fiscal 2023 and fiscal 2024.

Towards the end of fiscal 2022 and continuing into fiscal 2023, there were slight improvements in the supply chain's ability to deliver the parts and components necessary to support our production operations, resulting in increased (i) manufacturing efficiencies and (ii) production of buses to fulfill sales orders during fiscal 2023.

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While the gross margin on bus sales during the second quarter of fiscal 2023 lagged the historical gross margin reported prior to the COVID-19 pandemic, it returned to more normal historical levels during the latter half of fiscal 2023.

Additionally, Russian military forces launched a large-scale invasion of Ukraine on February 24, 2022, which further exacerbated global supply chain disruptions.

While the Company has no assets or customers in either of these countries, this military conflict significantly impacted our financial results during the second half of fiscal 2022 and continuing into fiscal 2023, primarily in an indirect manner since the Company does not sell to customers located in, or source goods directly from, either country.

Specifically, it has contributed to increased a) costs charged by suppliers for the purchase of inventory that is at least partially dependent on resources originating from either of the countries and b) freight costs, both of which negatively impacted the gross profit recognized on sales during the second half of fiscal 2022 and continuing into fiscal 2023.

Significant uncertainty exists concerning the magnitude and duration of the pandemic and subsequent supply chain constraints and accordingly, precludes any prediction as to the ultimate severity of the adverse impacts on our business, financial condition, results of operations, and liquidity.

Supply chain disruptions continued into fiscal 2024 as there were still occasional shortages of certain critical components as well as ongoing increases in raw materials costs, both of which impacted our business and operations by limiting the number of school buses that we could produce and sell as well as increasing the costs to manufacture buses.

Nonetheless, an increase in the number of school buses produced and sold, when coupled with periodic pricing actions taken by the Company to ensure that the increased sales prices charged for buses kept pace with increased costs to procure inventory to produce the buses, resulted in a significant increase in gross profit during fiscal 2024 when compared with fiscal 2023 and fiscal 2022.

Significant uncertainty exists concerning the magnitude and duration of the ongoing supply chain constraints and accordingly, precludes any prediction as to the ultimate severity of the adverse impacts on our business, financial condition, results of operations, and liquidity.

Summary of Significant Accounting Policies and Recently Issued Accounting Standards

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For example, significant management judgments are required in determining excess, obsolete, or unsalable inventory, allowance for doubtful accounts, potential impairment of long-lived assets, goodwill and intangible assets, the accounting for self-insurance reserves, warranty reserves, pension obligations, income taxes, environmental liabilities and contingencies.

Future events, including the extent and duration of any COVID-19 outbreaks and continued supply chain constraints and their related economic impacts, and their effects cannot be predicted with certainty, and, accordingly, the Company’s accounting estimates require the exercise of judgment.

Future events, including continued supply chain constraints and their related economic impacts, and their effects cannot be predicted with certainty, and, accordingly, the Company’s accounting estimates require the exercise of judgment.

The accounting estimates used in the preparation of the Company’s consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes.

3 unchanged sentences

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

The Company deposits its cash and cash equivalents, which are or may become in excess of federally insured limits, with many of the same high credit-quality financial institutions with which it has outstanding loans under the Credit Agreement (defined below) and evaluates and manages the risk of credit loss on a net basis.

To date, the Company has not experienced any losses related to its cash and cash equivalents balances.

Allowance for Doubtful Accounts

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Determination of the transaction price;

Allocation of the transaction price to the performance obligations in the contract;

Allocation of the transaction price to the performance obligation(s) in the contract;

Recognition of revenue, when, or as, we satisfy performance obligations.

3 unchanged sentences

For buses, control is generally transferred and the customer has the ability to direct the use of and obtain substantially all of the remaining benefits of the product when the product is delivered or when the product has been completed, is ready for delivery, has been paid for, its title has transferred and it is awaiting pickup by the customer.

For certain bus sale transactions, we may provide incentives including payment of a limited amount of future interest charges our customers may incur related to their purchase and financing of the bus with third party financing companies.

For certain bus sale transactions, we may provide incentives including payment

of a limited amount of future interest charges our customers may incur related to their purchase and financing of the bus with third party financing companies.

We reduce revenue at the recording date by the full amount of potential future interest we may be obligated to pay, which is an application of the "most likely amount" method.

For parts sales, control is generally transferred when the

customer has the ability to direct the use of and obtain substantially all of the remaining benefits of the products, which generally coincides with the point in time when the customer has assumed risk of loss and title has passed for the goods sold.

For parts sales, control is generally transferred when the customer has the ability to direct the use of and obtain substantially all of the remaining benefits of the products, which generally coincides with the point in time when the customer has assumed risk of loss and title has passed for the goods sold.

The Company sells extended warranties related to its products.

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The fair values of all derivative instruments are recognized as assets or liabilities at the balance sheet date.

Changes in the fair value of these derivative instruments are recognized in our operating results or included in other comprehensive income (loss), depending on whether the derivative instrument qualifies, and is appropriately designated, for hedge accounting treatment and if so, whether it represents a fair value or cash flow hedge.

Changes in the fair value of these derivative instruments are recognized in our operating results or included in other comprehensive income, depending on whether the derivative instrument qualifies, and is appropriately designated, for hedge accounting treatment and if so, whether it represents a fair value or cash flow hedge.

Gains and losses on derivative instruments are recognized in the operating results line item that reflects the underlying exposure that was mitigated either via a formal hedge accounting relationship or economically.

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Operating lease ROU assets are included in property, plant and equipment and the lease liabilities are included in other current liabilities and other liabilities on our Consolidated Balance Sheets.

Finance lease ROU assets are included in finance lease right-of-use assets and the lease liabilities are included in finance lease obligations (current) and finance lease obligations (long-term) on our Consolidated Balance Sheets.

Finance lease ROU assets are included in finance lease ROU assets and the lease liabilities are included in finance lease obligations (current) and finance lease obligations (long-term) on our Consolidated Balance Sheets.

Lease ROU assets and liabilities are recorded at commencement date based on the present value of lease payments over the lease term.

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Goodwill represents the excess of the purchase price of acquired businesses over the fair value of the assets acquired less liabilities assumed in connection with such acquisition.

In accordance with the provisions of Accounting Standards Codification Topic ("ASC") 350, Intangibles—Goodwill and Other , goodwill and intangible assets with indefinite useful lives acquired in an acquisition are not amortized, but instead are tested for impairment at least annually or more frequently should an event occur or circumstances indicate that the carrying amount may be impaired.

amortized, but instead are tested for impairment at least annually or more frequently should an event occur or circumstances indicate that the carrying amount may be impaired.

Such events or circumstances may include a significant change in business climate, economic and industry trends, legal factors, negative operating performance indicators, significant competition, changes in strategy or disposition of a reporting unit or a portion thereof.

3 unchanged sentences

When performing a qualitative assessment, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount.

If, when performing a quantitative assessment, the fair value of a reporting unit is less than its carrying amount, then the amount of the impairment loss, if any, must be measured using step two of the

impairment analysis.

In step two of the analysis, we would record an impairment loss equal to the excess of the carrying value of the reporting unit’s goodwill over its implied fair value, should such a circumstance arise.

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Debt Issue Costs

Amounts paid directly to lenders or as an original issue discount and amounts classified as issuance costs are recorded as a reduction in the carrying value of the debt, for which the Company had deferred financing costs totaling $ 1.5 million and $ 1.4 million at September 30, 2023 and October 1, 2022, respectively, incurred in connection with its debt facilities and related amendments.

Amounts paid directly to lenders or as an original issue discount and amounts classified as issuance costs are recorded as a reduction in the carrying value of the debt, for which the Company had deferred financing costs totaling $ 1.3 million and $ 1.5 million at September 28, 2024 and September 30, 2023, respectively, incurred in connection with its debt facilities and related amendments.

All deferred financing costs are amortized to interest expense.

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Accordingly, our obligation estimate is based on benefits earned at that time discounted using an estimate of the single equivalent discount rate determined by matching the plan’s future expected cash flows to spot rates from a yield curve comprised of high-quality corporate bond rates of various durations.

The Company recognizes the funded status of its pension plan obligations on the Consolidated Balance Sheet and records in other comprehensive income (loss) certain gains and losses that arise during the period, but are deferred under pension accounting rules.

Pension expense is recognized as a component of other income (expense), net on our Consolidated Statements of Operations.

The Company recognizes the funded status of its pension plan obligations on the Consolidated Balance Sheet and records in other comprehensive income certain gains and losses that arise during the period, but are deferred under pension accounting rules.

Pension expense is recognized as a component of other (expense) income, net on our Consolidated Statements of Operations.

Product Warranty Costs

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For fiscal 2024, fiscal 2023 and fiscal 2022, the Company expensed $ 9.4 million, $ 6.6 million and $ 6.1 million, respectively.

The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), which requires an asset and liability approach to financial accounting and reporting for income taxes.

The Company accounts for income taxes in accordance with the provisions of ASC 740, Income Taxes (“ASC 740”), which requires an asset and liability approach to financial accounting and reporting for income taxes.

Under this approach, deferred income taxes represent the expected future tax consequences of temporary differences between the financial statement and tax basis of assets and liabilities.

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The Company records interest and penalties related to unrecognized tax benefits in income tax expense.

The Company's policy for releasing income tax effects from accumulated other comprehensive income (loss) is to use a specific identification approach.

The Company's policy for releasing income tax effects from accumulated other comprehensive loss is to use a specific identification approach.

Environmental Liabilities

1 unchanged sentence

See Note 10, Guarantees, Commitments and Contingencies, for further information.

Retirement of Common Stock

When the Company decides to actually or constructively retire the shares of common stock it has repurchased, including those repurchases that have been previously reflected as treasury stock within its historical consolidated financial statements, it records the amount paid in excess of par value as a reduction in retained earnings, to the extent such recording does not reduce retained earning to an amount below zero.

In those instances in which such recording would reduce retained earnings below zero, it records the difference as a reduction in additional paid-in capital.

See Note 13, Stockholders' (Deficit) Equity , for further information.

Segment Reporting

Operating segments are components of an entity that engage in business activities with discrete financial information available that is regularly reviewed by the chief operating decision maker (“CODM”) in order to assess performance and allocate resources.

The Company’s CODM is its Chief Executive Officer.

The Company’s CODM is its President and Chief Executive Officer.

As discussed further in Note 11, Segment Information , the Company determined its operating and reportable segments to be Bus and Parts.

The Bus segment includes the manufacturing and assembly of school buses to be sold to a variety of customers across the U.S., Canada and in certain limited international markets.

The Parts segment consists primarily of the purchase of parts from third parties to be sold to dealers within the Company’s network and certain large fleet customers.

segment consists primarily of the purchase of parts from third parties to be sold to dealers within the Company’s network and certain large fleet customers.

Statement of Cash Flows

We classify distributions received from our equity method investment, if any, using the nature of distribution approach, such that distributions received are classified based on the nature of the activity of the investee that generated the distribution.

We classify distributions received from our equity method investment(s), if any, using the nature of distribution approach, such that distributions received are classified based on the nature of the activity of the investee that generated the distribution.

Returns on investment are classified within operating activities, while returns of investment are classified within investing activities.

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Recently Issued Accounting Standards

ASU 2020-04 On March 12, 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting , providing temporary guidance to ease the potential burden in accounting for reference rate reform primarily resulting from the discontinuation of the U.S.

Dollar London Interbank Offering Rate ("LIBOR"), which was initially expected to occur on December 31, 2021.

The amendments in ASU 2020-04 are elective and apply to all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued.

ASU 2021-01 On January 7, 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848):

Scope , which refines the scope of ASC 848, Reference Rate Reform , and clarifies some of its guidance as part of the FASB’s ongoing monitoring of global

reference rate reform activities.

The ASU permits entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, computing variation margin settlements, and calculating price alignment interest in connection with reference rate reform activities under way in global financial markets.

ASU 2022-06 On December 21, 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 , which defers the sunset date of ASC 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in ASC 848.

The above amendments were effective for all entities from March 12, 2020 through December 31, 2022.

An entity could elect to apply the amendments to contract modifications on a (i) full retrospective basis as of any date from the beginning of an interim period that included or was subsequent to March 12, 2020 or (ii) prospective basis from any date within an interim period that included or was subsequent to March 12, 2020 through the date that the interim financial statements were issued or available to be issued.

On March 5, 2021, the Intercontinental Exchange, Inc.

("ICE") Benchmark Administration ("IBA"), the administrator of LIBOR, issued a statement, following the completion of a formal consultation process, reaffirming the preliminary announcement it made on November 30, 2020, to cease publication of (i) 1 week and 2 month LIBOR subsequent to December 31, 2021 and (ii) the overnight and 1, 3, 6 and 12 month LIBOR tenors subsequent to June 30, 2023.

The IBA’s statement regarding such cessation dates primarily resulted from a majority of LIBOR panel banks communicating to the IBA that they would be unwilling to continue contributing to the relevant LIBOR settings after such dates.

As a result, the IBA determined that it would be unable to publish the relevant LIBOR settings on a representative basis after such dates.

The United Kingdom Financial Conduct Authority ("FCA"), which regulates the IBA, confirmed that, based on information it received from LIBOR panel banks, it did not expect that any LIBOR settings would become unrepresentative before the announced cessation dates summarized above.

With the maturity of the interest rate collar on September 30, 2022 (see Note 3) and execution of the Fifth Amended Credit Agreement (defined below) on September 2, 2022, which, among other things, changed one of the market interest rate indices that the Company can elect to accrue interest on outstanding borrowings from LIBOR to the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York (“SOFR”) and became effective at the end of the applicable interest period for any LIBOR borrowings outstanding on the fifth amendment effective date, the Company no longer has any contracts that reference LIBOR.

The change in interest rate indices from LIBOR to SOFR occurred at the end of December 2022 when the LIBOR interest rate on outstanding borrowings on the fifth amendment effective date matured.

At that time, the Company adjusted the effective interest rate on outstanding borrowings on a prospective basis, which did not have a material impact on the consolidated financial statements.

ASU 2023-07 On November 27, 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires public entities to disclose information about their reportable segments’ significant expenses on an interim and annual basis.

The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

ASU 2023-09 On December 14, 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which requires entities to disclose more detailed information in their reconciliation of their statutory tax rate to their effective tax rate.

Public business entities ("PBEs") are required to provide this incremental detail in a numerical, tabular format.

The ASU also requires entities to disclose more detailed information about income taxes paid, including by jurisdiction;

pretax income (or loss) from continuing operations;

and income tax expense (or benefit).

The ASU is effective for PBEs in fiscal years beginning after December 15, 2024, with early adoption permitted.

ASU 2024-03 On November 4, 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which requires PBEs to disclose disaggregated information about certain income statement expense line items.

The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

The new ASUs will not impact amounts recorded in the consolidated financial statements, but, instead, will require more detailed disclosures in the footnotes to the financial statements.

The Company plans to provide the updated disclosures required by the ASUs in the periods in which they are effective.

Any recently issued accounting standards not identified above do not apply to the Company or the impact is expected to be immaterial.

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( in thousands )

September 30, 2023 October 1, 2022

September 28, 2024 September 30, 2023

Accounts receivable $ 59,199 $ 12,674

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Other Current Liabilities

The balance in other current liabilities as of September 30, 2023 includes approximately $ 18.5 million of funds awarded by the U.S.

Environmental Protection Agency in administering the U.S.

Infrastructure Investment and Jobs Act (“IIJA”) that was signed into law in mid-November 2021.

The IIJA allocates federal funds to help local school jurisdictions purchase zero and low emission school buses over a five year period.

The Company recorded the receipt of these funds as deferred revenue and expects to recognize the vast majority of this amount as revenue during first half of fiscal 2024 as the underlying buses are produced and delivered.

The balance in other current liabilities as of September 28, 2024 and September 30, 2023 includes approximately $ 2.2 million and $18.5 million, respectively, of funds awarded by the U.S.

Environmental Protection Agency in administering the Clean School Bus Program (“CSBP”) that was signed into law in mid-November 2021.

The CSBP allocates federal funds to help local school jurisdictions purchase zero- and low-emission school buses over a five year period.

The Company recorded the receipt of these funds as deferred revenue.

The balance at September 30, 2023 was largely recognized as revenue during the first half of 2024 and the Company expects to recognize the vast majority of the September 28, 2024 balance as revenue during the first half of fiscal 2025, as the underlying buses are produced and delivered.

Self-Insurance

The following table reflects the total accrued self-insurance liability, comprised of workers' compensation and health insurance related claims, at the dates indicated:

(in thousands) September 30, 2023 October 1, 2022

(in thousands) September 28, 2024 September 30, 2023

Current portion $ 5,008 $ 4,475

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Derivative Instruments

We are charged variable rates of interest on our indebtedness outstanding under the Amended Credit Agreement (defined in Note 8) which exposes us to fluctuations in interest rates.

On October 24, 2018, the Company entered into a four year interest rate collar with a $ 150.0 million notional value with an effective date of November 30, 2018.

The collar was entered into in order to partially mitigate our exposure to interest rate fluctuations on our variable rate debt.

The collar established a range where we paid the counterparty if the three month LIBOR rate fell below the established floor rate of 1.5 %, and the counterparty paid us if the three month LIBOR rate exceeded the ceiling rate of 3.3 %.

The collar established a range where we paid the counterparty if the three month U.S.

Dollar London Interbank Offered Rate ("LIBOR") fell below the established floor rate of 1.5 %, and the counterparty paid us if the three month LIBOR exceeded the ceiling rate of 3.3 %.

The collar settled quarterly through the termination date of September 30, 2022.

No payments or receipts were exchanged on the interest rate collar contracts unless interest rates rose above or fell below the contracted ceiling or floor rates.

Throughout much of fiscal 2021 and fiscal 2022, the three month LIBOR rate fell below the established floor, which required us to make $ 2.0 million and $ 1.2 million in total cash payments to the counterparty in each fiscal year, respectively.

Throughout much of fiscal 2022, the three month LIBOR fell below the established floor, which required us to make $ 1.2 million in total cash payments to the counterparty.

The following table presents components of inventories at the dates indicated:

(in thousands) September 30, 2023 October 1, 2022

(in thousands) September 28, 2024 September 30, 2023

Raw materials $ 83,027 $ 88,116

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At October 1, 2022, certain Bus segment inventory had an approximate $ 8.8 million cumulative cost in excess of net realizable value, which was recognized as a loss in fiscal 2022.

No such cumulative cost in excess of net realizable value was present at September 30, 2023.

No such cumulative loss in excess of net realizable value was present at September 28, 2024 or September 30, 2023 and no such losses were recognized in fiscal 2024 or fiscal 2023.

Property, Plant and Equipment

Property, plant and equipment, net, consisted of the following at the dates indicated:

(in thousands) September 30, 2023 October 1, 2022

(in thousands) September 28, 2024 September 30, 2023

Land $ 2,504 $ 2,504

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We capitalized $ 0.3 million of interest expense in fiscal 2024 related to the construction of plant manufacturing assets.

A $1.4 million impairment loss for certain equipment that is no longer used in the Bus segment production process was recognized in fiscal 2022.

A $1.4 million impairment loss for certain equipment that was no longer used in the Bus segment production process was recognized in fiscal 2022.

No impairment loss was recognized in fiscal 2024 or fiscal 2023.

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Total $ 18,825 $ — $ 18,825

October 1, 2022

September 30, 2023

Bus $ 15,139 $ — $ 15,139

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The gross carrying amounts and accumulated amortization of intangible assets are as follows at the dates indicated:

September 30, 2023 October 1, 2022

September 28, 2024 September 30, 2023

(in thousands) Gross

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During the fourth quarters of fiscal 2024 and fiscal 2023, we performed our annual impairment assessment of our trade name, which did not indicate that an impairment existed;

therefore, no impairment of our indefinite lived intangible has been recorded.

therefore, no impairment of our indefinite lived intangible asset has been recorded.

Customer relationships are amortized on a straight-line basis over an estimated life of 20 years.

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Total amortization expense $ 3,738

Original Credit Agreement

On December 12, 2016, BBBC ("Borrower"), executed a $ 235.0 million five-year credit agreement with Bank of Montreal, which acts as the administrative agent and an issuing bank, Fifth Third Bank, as co-syndication agent and an issuing bank, and Regions Bank, as co-syndication agent, together with other lenders ("Credit Agreement").

2016 Credit Agreement

On December 12, 2016, BBBC ("Borrower"), executed a $ 235.0 million five-year credit agreement with Bank of Montreal, which acted as the administrative agent and an issuing bank, Fifth Third Bank, as co-syndication agent and an issuing bank, and Regions Bank, as co-syndication agent, together with other lenders ("2016 Credit Agreement").

The credit facilities provided for under the 2016 Credit Agreement consisted of a term loan facility in an aggregate initial principal amount of $ 160.0 million (the “2016 Term Loan Facility”) and a revolving credit facility with aggregate commitments of $75.0 million.

The revolving credit facility included a $15.0 million letter of credit sub-facility and a $ 5.0 million swing-line sub-facility (“2016 Revolving Credit Facility,” and together with the 2016 Term Loan Facility, each a “2016 Credit Facility” and collectively, the “2016 Credit Facilities”).

The obligations under the Credit Agreement and the related loan documents (including without limitation, the borrowings under the Credit Facilities and obligations in respect of certain cash management and hedging obligations owing to the agents, the lenders or their affiliates), are, in each case, secured by a lien on and security interest in substantially all of the assets of the Company and its subsidiaries including the Borrower, with certain exclusions as set forth in a collateral agreement entered into on the closing date.

The obligations under the 2016 Credit Agreement and the related loan documents (including without limitation, the borrowings under the 2016 Credit Facilities and obligations in respect of certain cash management and hedging obligations owing to the agents, the lenders or their affiliates), were, in each case, secured by a lien on and security interest in substantially all of the assets of the Company and its subsidiaries including the Borrower, with certain exclusions as set forth in a collateral agreement entered into on the closing date.

First Amendment to the 2016 Credit Agreement

On September 13, 2018, the Company entered into a first amendment to the 2016 Credit Agreement ("First Amended 2016 Credit Agreement").

The First Amended Credit Agreement provided for additional funding of $ 50.0 million and was funded in the first quarter of fiscal 2019.

The First Amended 2016 Credit Agreement provided for additional funding of $50.0 million and was funded in the first quarter of the fiscal year that ended September 28, 2019.

Substantially all of the proceeds were used to complete a tender offer to purchase shares of our common and preferred stock.

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The first amendment also amended the interest rate pricing matrix (as follows) as well as the principal payment schedule (which was subsequently amended as discussed below).

In connection with the First Amended Credit Agreement, we incurred $ 2.0 million of debt discount and issuance costs, which were recorded as contra-debt and are being amortized over the life of the Amended Credit Agreement (defined below) using the effective interest method.

The interest rate on the Term Loan Facility was (i) from the first amendment effective date until the first quarter ended on or about September 30, 2018, LIBOR plus 2.25 %, and (ii) commencing with the fiscal quarter ended on or about September 30, 2018 and thereafter, dependent on the Total Net Leverage Ratio ("TNLR") of the Company, an election of either base rate or LIBOR pursuant to the table below:

Level Total Net Leverage Ratio ABR Loans Eurodollar Loans

In connection with the First Amended 2016 Credit Agreement, we incurred $ 2.0 million of debt discount and issuance costs, which were recorded as contra-debt and were being amortized over the life of the Amended 2016 Credit Agreement (defined below) using the effective interest method.

The interest rate on the 2016 Term Loan Facility was (i) from the first amendment effective date until the first quarter ended on or about September 30, 2018, LIBOR plus 2.25%, and (ii) commencing with the fiscal quarter ended on or about September 30, 2018 and thereafter, dependent on the Total Net Leverage Ratio ("TNLR") of the Company, an election of either base rate ("ABR") or LIBOR pursuant to the table below:

Level Total Net Leverage Ratio ABR Loans LIBOR Loans

I Less than 2.00x 0.75% 1.75%

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The Second Amended 2016 Credit Agreement provided $41.9 million in additional revolving commitments bringing the total revolving commitments to $141.9 million.

The revolving commitments under the Second Amended Credit Agreement mature on September 13, 2023, which is the fifth anniversary of the effective date of the First Amended Credit Agreement.

The revolving commitments under the Second Amended 2016 Credit Agreement were scheduled to mature on September 13, 2023, which was the fifth anniversary of the effective date of the First Amended 2016 Credit Agreement.

The interest rate pricing grid remained unchanged, but the LIBOR floor was amended from 0% to 0.75%.

We incurred $0.9 million in fees related to the amendment.

The fees were capitalized to other assets on the Consolidated Balance Sheets and are being amortized on a straight-line basis to interest expense until maturity of the Amended Credit Agreement (defined below).

The fees were capitalized to other assets on the Consolidated Balance Sheets and were being amortized on a straight-line basis to interest expense until maturity of the Amended 2016 Credit Agreement (defined below).

Third Amendment to the 2016 Credit Agreement

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During the Limited Availability Period, the Amended 2016 Credit Agreement required that Borrower prepay existing revolving loans and, if undrawn and unreimbursed letters of credit exceeded $7.0 million, cash collateralize letters of credit if unrestricted cash and cash equivalents exceeded $20.0 million, as determined on a semimonthly basis.

Any issuance, amendment, renewal, or extension of credit

during the Limited Availability Period could not cause unrestricted cash and cash equivalents to exceed $ 20.0 million, or cause the aggregate outstanding Revolving Credit Facility principal to exceed $ 100.0 million.

Any issuance, amendment, renewal, or extension of credit during the Limited Availability Period could not cause unrestricted cash and cash equivalents to exceed $20.0 million, or cause the aggregate outstanding 2016 Revolving Credit Facility principal to exceed $100.0 million.

The Third Amended 2016 Credit Agreement also implemented a cap on permissible investments, restricted payments, certain payments of indebtedness and the fair market value of all assets subject to permitted dispositions during the Limited Availability Period.

For the duration of the Limited Availability Period, the Amended Credit Agreement set forth additional monthly reporting requirements, and required subordination agreements and intercreditor arrangements for certain other indebtedness and liens subject to administrative agent approval.

For the duration of the Limited Availability Period, the Amended 2016 Credit Agreement (defined below) set forth additional monthly reporting requirements, and required subordination agreements and intercreditor arrangements for certain other indebtedness and liens subject to administrative agent approval.

The Company incurred approximately $2.5 million in lender fees and other issuance costs relating to the third amendment.

Of such total, approximately $ 1.1 million and $ 0.9 million was capitalized within other assets and long-term debt (as a contra-balance), respectively, on the Consolidated Balance Sheets and are being amortized as an adjustment to interest expense on a straight-line basis and utilizing the effective interest method, respectively, until maturity of the Amended Credit Agreement (defined below).

Of such total, approximately $1.1 million and $0.9 million was capitalized within other assets and long-term debt (as a contra-balance), respectively, on the Consolidated Balance Sheets and were being amortized as an adjustment to interest expense on a straight-line basis and utilizing the effective interest method, respectively, until maturity of the Amended 2016 Credit Agreement (defined below).

The remaining approximate $0.5 million was recorded to loss on debt modification on the Consolidated Statements of Operations.

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The pricing grid in the Fourth Amended 2016 Credit Agreement, which was based on the TNLR, was determined in accordance with the amended pricing matrix set forth below:

Level Total Net Leverage Ratio ABR Loans Eurodollar Loans

Level Total Net Leverage Ratio ABR Loans LIBOR Loans

I Less than 2.00x 0.75% 1.75%

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The Company incurred approximately $2.5 million in lender fees and other issuance costs relating to the fourth amendment.

Of such total, approximately $ 1.1 million and $ 0.8 million was capitalized within other assets and long-term debt (as a contra-balance), respectively, on the Consolidated Balance Sheets and will be amortized as an adjustment to interest expense on a straight-line basis and utilizing the effective interest method, respectively, until maturity of the Amended Credit Agreement (defined below).

Of such total, approximately $1.1 million and $0.8 million was capitalized within other assets and long-term debt (as a contra-balance), respectively, on the Consolidated Balance Sheets and was being amortized as an adjustment to interest expense on a straight-line basis and utilizing the effective interest method, respectively, until maturity of the Amended 2016 Credit Agreement (defined below).

The remaining approximate $0.5 million was recorded to loss on debt modification on the Consolidated Statements of Operations.

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On September 2, 2022, the Company executed a fifth amendment and limited waiver to the 2016 Credit Agreement, First Amended 2016 Credit Agreement, Second Amended 2016 Credit Agreement, Third Amended 2016 Credit Agreement and Fourth Amended 2016 Credit Agreement ("Fifth Amended 2016 Credit Agreement").

The Fifth Amended Credit Agreement, among other things, resulted in Borrower and administrative agent jointly electing an early opt-in to change one of the market interest rate indices that Borrower can elect to accrue interest on outstanding borrowings from LIBOR, which was discontinued subsequent to June 30, 2023, to SOFR.

The Fifth Amended 2016 Credit Agreement, among other things, resulted in Borrower and administrative agent jointly electing an early opt-in to change one of the market interest rate indices that Borrower could elect to accrue interest on outstanding borrowings from LIBOR, which was discontinued subsequent to June 30, 2023, to the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York ("SOFR").

Such change became effective at the end of the applicable interest period for any LIBOR borrowings outstanding on the fifth amendment effective date.

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The Company requested such covenant relief given the supply chain disruptions that continued to challenge the Company throughout fiscal 2022.

Finally, the Fifth Amended Credit Agreement requires the Company to provide a rolling thirteen week cash flow forecast to the administrative agent, on a monthly basis, beginning with the fiscal month ended August 27, 2022 and ending with the fiscal month ending April 1, 2023.

Finally, the Fifth Amended 2016 Credit Agreement required the Company to provide a rolling thirteen week cash flow forecast to the administrative agent, on a monthly basis, beginning with the fiscal month ended August 27, 2022 and ending with the fiscal month ending April 1, 2023.

The Company incurred approximately $0.3 million in lender fees and other issuance costs relating to the fifth amendment.

Of such total, approximately $ 0.1 million and $ 0.1 million was capitalized within other assets and long-term debt (as a contra-balance), respectively, on the Consolidated Balance Sheets and will be amortized as an adjustment to interest expense on a straight-line basis and utilizing the effective interest method, respectively, until maturity of the Amended Credit Agreement.

Of such total, approximately $0.1 million and $0.1 million was capitalized within other assets and long-term debt (as a contra-balance), respectively, on the Consolidated Balance Sheets and was being amortized as an adjustment to interest expense on a straight-line basis and utilizing the effective interest method, respectively, until maturity of the Amended 2016 Credit Agreement (defined below).

The remaining approximate $0.1 million was recorded to loss on debt modification on the Consolidated Statements of Operations.

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On November 21, 2022, the Company executed a sixth amendment to the 2016 Credit Agreement, First Amended 2016 Credit Agreement, Second Amended 2016 Credit Agreement, Third Amended 2016 Credit Agreement, Fourth Amended 2016 Credit Agreement and Fifth Amended 2016 Credit Agreement ("Sixth Amended 2016 Credit Agreement" and collectively, the "Amended 2016 Credit Agreement").

The Sixth Amended Credit Agreement, among other things, extends the maturity date for both the Term Loan Facility and Revolving Credit Facility from September 13, 2023 to December 31, 2024.

The total Revolving Credit Facility commitment is reduced to an aggregate principal amount of $ 90.0 million, of which $ 80.0 million is available for Borrower to draw, with the remaining $ 10.0 million subject to written approval from the lenders, which, once obtained, will be irrevocable.

The Sixth Amended 2016 Credit Agreement, among other things, extended the maturity date for both the 2016 Term Loan Facility and 2016 Revolving Credit Facility from September 13, 2023 to December 31, 2024.

The total 2016 Revolving Credit Facility commitment was reduced to an aggregate principal amount of $90.0 million, of which $80.0 million was available for Borrower to draw, with the remaining $10.0 million subject to written approval from the lenders, which, once obtained, was irrevocable.

There was no change in the 2016 Term Loan Facility commitment;

however, the Sixth Amended Credit Agreement requires principal repayments approximating $ 5.0 million on a quarterly basis through September 30, 2024, with the remaining balance due upon maturity.

however, the Sixth Amended 2016 Credit Agreement required principal repayments approximating $5.0 million on a quarterly basis through September 30, 2024, with the remaining balance due upon maturity.

There were $151.6 million of term loan borrowings outstanding on the sixth amendment effective date.

The Sixth Amended Credit Agreement also provides for temporary amendments to certain financial performance covenants during the Amended Limited Availability Period, which will terminate on the date on which the Company’s TNLR for the two fiscal quarters most recently ended is each less than 4.00x and no default or event of default has occurred and is continuing.

However, the Amended Limited Available Period can re-occur upon a default or event of default or if the TNLR for the immediately preceding fiscal quarter is equal to or greater than 4.00x.

The minimum consolidated EBITDA that the Company is required to maintain during the Amended Limited Availability Period is updated as set forth in the table below (in millions):

The Sixth Amended 2016 Credit Agreement also provided for temporary amendments to certain financial performance covenants during the Amended Limited Availability Period, which terminated on the date on which the Company’s TNLR for the two fiscal quarters most recently ended was each less than 4.00x and no default or event of default had occurred and was continuing.

However, the Amended Limited Available Period could re-occur upon a default or event of default or if the TNLR for the immediately preceding fiscal quarter was equal to or greater than 4.00x.

The minimum consolidated EBITDA that the Company was required to maintain during the Amended Limited Availability Period was updated as set forth in the table below (in millions):

Period Minimum Consolidated EBITDA

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Fiscal quarter ending September 30, 2023 $60.0

For purposes of complying with the above minimum consolidated EBITDA covenant, the Company’s consolidated EBITDA for the (i) two fiscal quarter period ending July 1, 2023 is multiplied by 2 and (ii) three fiscal quarter period ending September 30, 2023 is multiplied by 4/3.

The minimum liquidity (in the form of undrawn availability under the Revolving Credit Facility and unrestricted cash and cash equivalents) that the Company is required to maintain at the end of each fiscal month during the Amended Limited Availability Period is amended as set forth in the table below (in millions):

For purposes of complying with the above minimum consolidated EBITDA covenant, the Company’s consolidated EBITDA for the (i) two fiscal quarter period ending July 1, 2023 was multiplied by 2 and (ii) three fiscal quarter period ending September 30, 2023 was multiplied by 4/3.

The minimum liquidity (in the form of undrawn availability under the 2016 Revolving Credit Facility and unrestricted cash and cash equivalents) that the Company was required to maintain at the end of each fiscal month during the Amended Limited Availability Period was amended as set forth in the table below (in millions):

Period Minimum Liquidity

Sixth amendment effective date through December 30, 2023 $30.0

Additionally, the Units Covenant is amended for Units to be calculated at the end of each applicable fiscal month on a cumulative basis, with the minimum cumulative threshold that the Company is required to maintain during the Amended Limited Availability Period amended as set forth in the table below.

The Units Covenant is triggered only if the Company’s liquidity for the most-recently ended fiscal month is less than $ 50.0 million during the Amended Limited Availability Period:

Additionally, the Units Covenant was amended for Units to be calculated at the end of each applicable fiscal month on a cumulative basis, with the minimum cumulative threshold that the Company was required to maintain during the Amended Limited Availability Period amended as set forth in the table below.

The Units Covenant was triggered only if the Company’s liquidity for the most-recently ended fiscal month was less than $50.0 million during the Amended Limited Availability Period:

Period Minimum Units Manufactured

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Period from October 2, 2022 and ending April 1, 2023 3,000

The Company is not required to comply with a maximum TNLR financial maintenance covenant for any fiscal quarters from the sixth amendment effective date through September 30, 2023, with the maximum threshold amended thereafter as follows :

The Company was not required to comply with a maximum TNLR financial maintenance covenant for any fiscal quarters from the sixth amendment effective date through September 30, 2023, with the maximum threshold amended thereafter as follows :

Period Maximum Total

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Fiscal quarter ending June 29, 2024 and thereafter 3.50:1.00

The pricing grid in the Amended Credit Agreement, which is based on the TNLR, is applicable to both term loan and revolving borrowings and is determined in accordance with the amended pricing matrix set forth below:

The pricing grid in the Amended 2016 Credit Agreement, which was based on the TNLR, was applicable to both term loan and revolving borrowings and was determined in accordance with the amended pricing matrix set forth below:

Level Total Net Leverage Ratio ABR Loans SOFR Loans

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IX Greater than 5.00x 4.75% 5.75%

Further, the pricing margins for levels VII though IX above are each increased (x) by 0.25 % if the aggregate revolving borrowings are equal to or greater than $ 50.0 million and less than or equal to $ 80.0 million and (y) by 0.50 % if the aggregate revolving borrowings are greater than $ 80.0 million.

Further, the pricing margins for levels VII though IX above were each increased (x) by 0.25% if the aggregate revolving borrowings were equal to or greater than $50.0 million and less than or equal to $80.0 million and (y) by 0.50% if the aggregate revolving borrowings were greater than $80.0 million.

On the sixth amendment effective date, the interest rate was set at SOFR plus 5.75% and was adjusted, as applicable, for the fiscal quarter ending December 31, 2022 and subsequently in accordance with the amended pricing grid set forth above.

Finally, the Company is required to deliver to the administrative agent, on a quarterly basis, a projected consolidated balance sheet and consolidated statements of projected operations and cash flows for the next four fiscal quarter period.

Finally, the Company was required to deliver to the administrative agent, on a quarterly basis, a projected consolidated balance sheet and consolidated statements of projected operations and cash flows for the next four fiscal quarter period.

The Company incurred approximately $3.3 million in lender fees and other issuance costs relating to the sixth amendment.

Of such total, approximately $ 1.2 million and $ 1.5 million was capitalized within other assets and long-term debt (as a contra-balance), respectively, on the Consolidated Balance Sheets and will be amortized as an adjustment to interest expense on a straight-line basis and utilizing the effective interest method, respectively, until maturity of the Amended Credit Agreement.

Of such total, approximately $1.2 million and $1.5 million was capitalized within other assets and long-term debt (as a contra-balance), respectively, on the Consolidated Balance Sheets and was being amortized as an adjustment to interest expense on a straight-line basis and utilizing the effective interest method, respectively, until maturity of the Amended 2016 Credit Agreement.

The remaining approximate $0.5 million was recorded to loss on debt modification on the Consolidated Statements of Operations.

Fiscal 2024 Credit Agreement

On November 17, 2023 (the “Closing Date”), BBBC, as Borrower, executed a $250.0 million five-year credit agreement with Bank of Montreal, acting as administrative agent and an issuing bank;

several joint lead arranger partners and issuing banks, including Bank of America;

and a syndicate of other lenders (the "Credit Agreement").

The credit facilities provided for under the Credit Agreement consist of a term loan facility in an aggregate initial principal amount of $100.0 million (the “Term Loan Facility”) and a revolving credit facility with aggregate commitments of $150.0 million.

revolving credit facility includes a $25.0 million letter of credit sub-facility and $5.0 million swingline sub-facility (the “Revolving Credit Facility,” and together with the Term Loan Facility, each a “Credit Facility” and collectively, the “Credit Facilities”).

A minimum of $100.0 million of additional term loans and/or revolving credit commitments may be incurred under the Credit Agreement, subject to certain limitations as set forth in the Credit Agreement, and which additional loans and/or commitments would require further commitments from existing lenders or from new lenders.

Borrower has the right to prepay the loans outstanding under the Credit Facilities without premium or penalty (subject to customary breakage costs, if applicable).

Additionally, proceeds from asset sales, condemnation, casualty insurance and/or debt issuances (in certain circumstances) are required to be used to prepay borrowings outstanding under the Credit Facilities.

Borrowings under the Term Loan Facility, which were made on the Closing Date, may not be reborrowed once they are repaid while borrowings under the Revolving Credit Facility may be repaid and reborrowed from time to time at our election.

The Term Loan Facility is subject to amortization of principal, payable in equal quarterly installments on the last day of each fiscal quarter, which commenced on March 30, 2024, with 5.0% of the $100.0 million aggregate principal amount of all initial term loans outstanding at the Closing Date payable each year prior to the maturity date of the Term Loan Facility.

The remaining initial aggregate principal amount outstanding under the Term Loan Facility, as well as any outstanding borrowings under the Revolving Credit Facility, will be payable on the November 17, 2028 maturity date of the Credit Agreement.

The Credit Facilities are guaranteed by all of the Company’s wholly-owned domestic restricted subsidiaries (subject to customary exceptions) and are secured by a security agreement which pledges a lien on virtually all of the assets of Borrower, the Company and the Company’s other wholly-owned domestic restricted subsidiaries, other than any owned or leased real property and subject to customary exceptions.

The $100.0 million of Term Loan Facility proceeds and $36.2 million of Revolving Credit Facility proceeds that were borrowed on the Closing Date were used to pay (i) the $131.8 million of term loan indebtedness outstanding under the Amended 2016 Credit Agreement, (ii) interest and commitment fees accrued under the Amended 2016 Credit Agreement through the Closing Date and (iii) transaction costs associated with the consummation of the Credit Agreement.

Under the terms of the Credit Agreement, Borrower, the Company and the Company’s other wholly-owned domestic restricted subsidiaries are subject to customary affirmative and negative covenants and events of default for facilities of this type (with customary grace periods, as applicable, and lender remedies).

Borrowings under the Credit Facilities bear interest, at our option, at (i) ABR or (ii) SOFR plus 0.10%, plus an applicable margin depending on the TNLR (which is defined in the Credit Agreement as the ratio of consolidated net debt to consolidated EBITDA on a trailing four quarter basis) of the Company as follows:

ABR Loans SOFR Loans

I Less than 1.00x

II Greater than or equal to 1.00x and less than 1.50x

III Greater than or equal to 1.50x and less than 2.25x

IV Greater than or equal to 2.25x

Pricing on the Closing Date was set at Level III until receipt of the financial information and related compliance certificate for the first fiscal quarter that ended after the Closing Date, with pricing as of September 28, 2024 set at Level I.

Borrower is also required to pay lenders an unused commitment fee of between 0.25% and 0.45% per annum on the undrawn commitments under the Revolving Credit Facility, depending on the TNLR, quarterly in arrears.

The Credit Agreement also includes a requirement that the Company comply with the following financial covenants on the last day of each fiscal quarter through maturity:

(i) a pro forma TNLR of not greater than 3.00:1.00 and (ii) a pro forma fixed charge coverage ratio (as defined in the Credit Agreement) of not less than 1.20:1.00.

The Company was in compliance with such covenants as of September 28, 2024.

The Company incurred approximately $ 3.1 million in lender fees and other issuance costs relating to the Credit Agreement.

Of such total, approximately $ 1.9 million and $ 0.8 million was capitalized within other assets and long-term debt (as a contra-balance), respectively, on the Condensed Consolidated Balance Sheets and is being amortized as an adjustment to interest expense on a straight-line basis and utilizing the effective interest method, respectively, until maturity of the Credit Agreement.

The remaining approximate $ 0.4 million was recorded to loss on debt refinancing or modification on the Condensed Consolidated Statements of Operations.

In conjunction with executing the Credit Agreement, previously capitalized lender fees and other issuance costs relating to the Amended 2016 Credit Agreement and incurred in prior periods totaling $1.1 million were also expensed to loss on debt refinancing or modification on the Condensed Consolidated Statements of Operations.

Additional Disclosures

Debt consisted of the following at the dates indicated:

(in thousands) September 30, 2023 October 1, 2022

(in thousands) September 28, 2024 September 30, 2023

Term loans, net of deferred financing costs of $ 1,256 and $ 1,456 , respectively

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Long-term debt, net of current portion $ 89,994 $ 110,544

Term loans are recognized on the Consolidated Balance Sheets at the unpaid principal balance, and are not subject to fair value measurement;

Term loan borrowings are recognized on the Consolidated Balance Sheets at the unpaid principal balance, and are not subject to fair value measurement;

however, given the variable rates on the loans, the Company estimates the unpaid principal balance to approximate fair value.

If measured at fair value in the financial statements, the term loans would be classified as Level 2 in the fair value hierarchy.

At September 30, 2023 and October 1, 2022, $ 131.8 million and $ 151.6 million, respectively, were outstanding on the term loans.

At September 30, 2023 and October 1, 2022, the stated interest rates on the term loans were 10.0 % and 7.9 %, respectively.

At September 30, 2023 and October 1, 2022, the weighted-average annual effective interest rates for the term loans were 10.9 % and 8.0 %, respectively, which included amortization of the deferred debt issuance costs and interest payments relating to the interest rate collar, as applicable.

At September 28, 2024 and September 30, 2023, $ 96.3 million and $ 131.8 million, respectively, were outstanding on the term loans.

At September 28, 2024 and September 30, 2023, the stated interest rates on the term loans were 6.9 % and 10.0 %, respectively.

At September 28, 2024 and September 30, 2023, the weighted-average annual effective interest rates for the term loans were 8.2 % and 10.9 %, respectively, which included amortization of the deferred debt issuance costs.

There were no borrowings outstanding on the Revolving Credit Facility at September 28, 2024.

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(in thousands)

Year Principal Payments

2024 $ 19,800

Principal Payments

Thereafter 71,250

Total remaining principal payments $ 96,250

On November 17, 2023, prior to filing our fiscal 2023 Form 10-K, the Amended Credit Agreement was refinanced via the execution of a new credit agreement.

Among other changes, the new credit agreement requires quarterly principal payments of approximately $ 1.3 million effective for the quarter ending March 30, 2024, with the remaining unpaid principal balance due on November 17, 2028.

See Note 20, Subsequent Events , for further discussion.

The components of income tax (expense) benefit were as follows for the fiscal years presented:

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State ( 4,447 ) ( 243 ) —

Foreign ( 267 ) — —

Total current tax (expense) benefit

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State ( 372 ) ( 1,835 ) 209

Total deferred tax (expense) benefit

Total deferred tax benefit (expense)

1,674 ( 8,065 ) 11,071

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Specifically, the Company estimates that approximately $ 5.3 million (tax effected) of state tax credit carryforwards will expire unused between 2025 and 2032 and approximately $ 0.5 million (tax effected) of state NOL carryforwards will expire unused between 2028 and 2033.

At September 30, 2023, the Company had $ 0.2 million (tax effected) in Federal NOL carryforwards, which the Company estimates will be fully utilized in future periods.

At September 28, 2024, the Company had no federal NOL carryforwards.

The effective tax rates for fiscal 2024, fiscal 2023 and fiscal 2022 were 26.2 %, 34.7 % and 21.6 %, respectively.

The effective tax rate for fiscal 2024 differed from the statutory federal income tax rate of 21.0 %.

The increase in the effective tax rate to 26.2 % was primarily due to the impacts of state taxes and certain permanent items on the federal rate, which were partially offset by the impacts from federal and state tax credits (net of valuation allowances) and discrete period items.

The effective tax rate for fiscal 2023 differed from the statutory federal income tax rate of 21.0 %.

The increase in the effective tax rate to 34.7 % was primarily due to the impacts of state taxes and certain permanent items on the federal rate.

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This increase was partially offset by an increase in the valuation allowance.

The effective tax rate for fiscal 2021 differed from the statutory Federal income tax rate of 21.0 %.

There were several items that increased the effective tax rate to 60.2 %, including the impacts of tax credits, return to accrual adjustments, and state taxes on the Federal rate.

These increases were partially offset by a change in uncertain tax positions.

A reconciliation between the reported income tax (expense) benefit and the amount computed by applying the statutory federal income tax rate is as follows:

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recognition of the tax position in the financial statements.

During fiscal 2021, management obtained additional information that resulted in a conclusion that certain tax positions previously recognized in specific prior year financial statements may be subject to adjustment in conjunction with an examination.

Accordingly, such determination resulted in the derecognition of these tax positions during fiscal 2021.

The Company's liability arising from uncertain tax positions ("UTPs"), including accrued interest and penalties, is recorded in other liabilities in the Consolidated Balance Sheets.

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The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.

There was no accrued interest and penalties at September 30, 2023 and $ 0.1 million at October 1, 2022.

There were no accrued interest and penalties at September 28, 2024 or September 30, 2023.

The Company is subject to taxation mostly in the U.S.

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At September 28, 2024, tax years prior to 2020 are generally no longer subject to examination by federal and most state tax authorities.

The following table sets forth the sources of and differences between the financial accounting and tax bases of the Company’s assets and liabilities which give rise to the net deferred tax assets at the dates indicated:

(in thousands) September 30, 2023 October 1, 2022

(in thousands) September 28, 2024 September 30, 2023

Deferred tax liabilities

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Investor tax on non-consolidated affiliate income ( 1,261 ) ( 866 )

Other assets — ( 127 )

Total deferred tax liabilities $ ( 22,400 ) $ ( 22,913 )

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Inventories 812 743

Capitalized research & development

Unearned income 4,301 3,096

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Deferred tax assets less valuation allowance $ 22,016 $ 22,582

Net deferred tax (liabilities) assets $ ( 331 ) $ 10,907

Net deferred tax liabilities

$ ( 384 ) $ ( 331 )

Guarantees, Commitments and Contingencies

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In addition, such regulations could require the Company to acquire costly equipment or to incur other significant expenses to comply with environmental regulations.

The Company is currently not involved in any material environmental proceedings and therefore, management believes that the resolution of environmental matters will not have a material adverse effect on the Company’s financial statements.

Our environmental liability, included in current accrued expenses and other long-term liabilities on the Consolidated Balance Sheets, was $ 0.3 million and $ 0.1 million at September 30, 2023 and October 1, 2022, respectively.

The Company is currently not involved in any material environmental

proceedings and therefore, management believes that the resolution of environmental matters will not have a material adverse effect on the Company’s financial statements.

Our environmental liability, included in current accrued expenses and other long-term liabilities on the Consolidated Balance Sheets, was $ 0.5 million and $ 0.3 million at September 28, 2024 and September 30, 2023, respectively.

Cash flows over the next five years are expected to be immaterial each year, with no material difference between total cash flows and our accrued balance.

Lease Commitments

We have operating and finance leases for office space, warehouse space, or a combination of both.

Our leases have remaining lease terms ranging from 0.3 years to 5.9 years with the option to extend leases for up to 0.3 years.

We have operating leases for office and warehouse space and finance leases for equipment.

Our leases have remaining lease terms ranging from 0.2 years to 5.7 years with the option to extend certain leases for up to 1 year.

The components of lease costs included on the Consolidated Statements of Operations are as follows:

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The following table summarizes the lease amounts included on the Consolidated Balance Sheets as follows:

(in thousands) Balance Sheet Location September 30, 2023 October 1, 2022

(in thousands) Balance Sheet Location September 28, 2024 September 30, 2023

Operating Property, plant and equipment $ 4,353 $ 4,298

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Operating Finance

Weighted average remaining lease term 3.5 years 1.5 years

Weighted average remaining lease term 2.8 0.5

Weighted average discount rate 6.0 % 3.2 %

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Segment gross profit $ 256,156 $ 138,850 $ 36,546

The following table is a reconciliation of segment gross profit to consolidated income before income taxes for the fiscal years presented:

The following table is a reconciliation of segment gross profit to consolidated income (loss) before income taxes for the fiscal years presented:

(in thousands) 2024 2023 2022

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( 4,394 ) ( 8,307 ) 2,947

Loss on debt modification ( 537 ) ( 632 ) ( 598 )

Loss on debt refinancing or modification

( 1,558 ) ( 537 ) ( 632 )

Income (loss) before income taxes

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Subsequent to the sale, Coliseum owned an approximate 15 % equity interest in the Company.

During the second half of fiscal 2023, Coliseum sold all of its shares of common stock purchased through the private placement (see Note 19 for further information).

During the second half of fiscal 2023, Coliseum sold all of its shares of common stock purchased through the Private Placement (see Note 19, Stockholder Transaction Costs , for further information).

Share Repurchase Program and Common Stock Retirement

On January 31, 2024, the Board of Directors of the Company authorized and approved a share repurchase program for up to $60 million of outstanding shares of the Company’s common stock over a period of 24 months, expiring January 31, 2026.

Under the share repurchase program, the Company may repurchase shares through open market purchases, privately negotiated transactions, accelerated share repurchase transactions, block purchases or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended.

In the latter part of August and first half of September 2024, the Company repurchased 201,818 shares of its common stock for $9.9 million, pursuant to the share repurchase plan.

No such repurchases were made in fiscal 2023.

The total remaining authorization for future common stock repurchases under the Company's share repurchase program was $50.1 million as of September 28, 2024.

In mid-September 2024, the Company constructively retired the shares of common stock it had recently repurchased by recording the $9.9 million paid in excess of the $0.0001 par value of each share as a reduction in retained earnings.

Later that same month, the Company retired the shares of common stock that had previously been reflected as treasury stock within its historical consolidated financial statements by recording the amount paid in excess of the $0.0001 par value of each share as a $39.9 million reduction in retained earnings, which reduced the value in this account to zero, with the remaining $10.4 million recorded as a reduction in additional paid-in capital.

Earnings (Loss) Per Share

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Weighted average dilutive securities, stock options 283,061 19,992 —

Weighted average dilutive securities, warrants 387,676 — —

Weighted average shares and dilutive potential common shares 33,349,221 32,258,652 31,020,399

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$ 3.16 $ 0.74 $ ( 1.48 )

(1) Potentially dilutive securities representing 0.7 million and 0.5 million shares of common stock were excluded from the computation of diluted earnings per share for fiscal 2023 and fiscal 2022, respectively, as their effect would have been anti-dilutive.

(1) There were no potentially dilutive securities for fiscal 2024 while potentially dilutive securities representing 0.7 million and 0.5 million shares of common stock were excluded from the computation of diluted earnings per share for fiscal 2023 and fiscal 2022, respectively, as their effect would have been anti-dilutive.

Because of the timing of the share repurchases discussed in Note 13 above, they had no material impact on earnings per share for fiscal 2024.

Share-Based Compensation

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The Company has never declared or paid a cash dividend on its common stock.

Restricted stock and RSUs are valued based on the intrinsic value of the difference between the exercise price, if any, of the award and the fair market value of our

common stock on the grant date.

Restricted stock and RSUs are valued based on the intrinsic value of the difference between the exercise price, if any, of the award and the fair market value of our common stock on the grant date.

Beginning in fiscal 2024, the Compensation Committee decided that all new annual stock awards issued in accordance with the terms of the Plan would be RSUs.

We expense any award with graded-vesting features using a straight-line attribution method and account for forfeitures in recording share-based compensation expense as they occur.

Restricted Stock Awards

The following table summarizes the Company's restricted stock and RSU activity for the fiscal year presented:

Restricted Stock Activity Number of Shares Weighted-Average Grant Date Fair Value

The following table summarizes the Company's RSU activity for the fiscal year presented:

RSU Activity Number of Shares Weighted-Average Grant Date Fair Value

Balance, beginning of year 584,063 $ 22.99

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Balance, end of year 635,648 23.07

The weighted-average grant date fair value of restricted stock awards granted in fiscal 2022 and fiscal 2021 was $ 17.35 and $ 18.50 , respectively.

Compensation expense for restricted stock awards, recognized in selling, general and administrative expenses on the Consolidated Statements of Operations, was $ 3.2 million, $ 2.6 million, and $ 3.9 million for fiscal 2023, fiscal 2022, and fiscal 2021, respectively, with associated tax benefits of $ 0.8 million, $ 0.7 million, and $ 1.0 million, respectively.

At September 30, 2023, unrecognized compensation cost related to restricted stock awards totaled $ 10.4 million and is expected to be recognized over a weighted-average period of 1.5 years.

The weighted-average grant date fair value of RSU awards granted in fiscal 2023 and fiscal 2022 was $ 23.41 and $ 17.35 , respectively.

Compensation expense for RSU awards, recognized in selling, general and administrative expenses on the Consolidated Statements of Operations, was $ 7.2 million, $ 3.2 million, and $ 2.6 million for fiscal 2024, fiscal 2023, and fiscal 2022, respectively, with associated tax benefits of $ 1.8 million, $ 0.8 million, and $ 0.7 million, respectively.

At September 28, 2024, unrecognized compensation cost related to RSU awards totaled $ 6.1 million and is expected to be recognized over a weighted-average period of 0.9 years.

Stock Option Awards

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(3) Fully vested and exercisable options at the end of the fiscal year had $ 8.6 million intrinsic value.

The total aggregate intrinsic value of stock options exercised during fiscal 2022 and fiscal 2021 was less than $ 0.1 million and $ 1.1 million, respectively.

The total aggregate intrinsic value of stock options exercised during fiscal 2023 and fiscal 2022 was $ 0.3 million and less than $ 0.1 million, respectively.

Compensation expense for stock option awards, recognized in selling, general and administrative expenses on the Consolidated Statements of Operations, was $ 1.2 million, $ 0.8 million, and $ 0.9 million for fiscal 2024, fiscal 2023, and fiscal 2022, respectively, with associated tax benefits of $ 0.3 million, $ 0.2 million, and $ 0.2 million, respectively.

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No accrual of future benefits is calculated beyond this date.

The Company made $ 1.1 million of contributions to the Defined Benefit Plan during fiscal 2023 and made no contributions in fiscal 2022.

The Company made no contributions to the Defined Benefit Plan during fiscal 2024 and made $ 1.1 million of contributions in fiscal 2023.

For fiscal 2024 and fiscal 2023, benefits paid were $ 8.8 million and $ 13.2 million, respectively.

The fiscal 2023 benefit payments included $ 5.2 million paid to certain participants who met certain specified criteria (including that they were former employees of the Company who earned enough service to qualify for pension benefits under the terms of the Defined Benefit Plan while they were employed but were not otherwise receiving retirement payments on the date that the benefits were paid) and elected to receive a single lump-sum payment in lieu of future retirement payments, with no similar payments made in fiscal 2024.

The projected benefit obligation (“PBO”) for the Defined Benefit Plan was $ 108.4 million and $ 122.6 million at September 30, 2023 and October 1, 2022, respectively.

The projected benefit obligation (“PBO”) for the Defined Benefit Plan was $ 113.6 million and $ 108.4 million at September 28, 2024 and September 30, 2023, respectively.

The reconciliation of the beginning and ending balances of the PBO for the Defined Benefit Plan for the fiscal years indicated is presented in the following table:

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Interest cost 5,936 6,035

Actuarial gain (1) ( 7,038 ) ( 33,293 )

Actuarial loss (gain) (1)

8,091 ( 7,038 )

Benefits paid ( 8,786 ) ( 13,175 )

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Funded Status:

The following table reconciles the benefit obligations, plan assets, funded status and net liability information of the Defined Benefit Plan at the dates indicated.

The net pension liability is reflected in long-term liabilities on the Consolidated Balance Sheets.

The following table reconciles the benefit obligations, plan assets, funded status and net asset (liability) information of the Defined Benefit Plan at the dates indicated.

The net pension asset or liability is reflected in long-term assets or liabilities, respectively, on the Consolidated Balance Sheets.

Funded Status

(in thousands) September 30, 2023 October 1, 2022

(in thousands) September 28, 2024 September 30, 2023

Benefit obligation $ 113,634 $ 108,393

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Funded status 4,649 ( 2,404 )

Net pension liability recognized $ ( 2,404 ) $ ( 16,024 )

Net pension asset (liability) recognized

$ 4,649 $ ( 2,404 )

Fair Value of Plan Assets:

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The Defined Benefit Plan assets are comprised of various investment funds, which are valued based upon their quoted market prices.

The invested pension plan assets of the Defined Benefit Plan are all Level 2 assets under ASC 820, Fair Value Measurements (“ASC 820”).

The invested pension plan assets of the Defined Benefit Plan are all Level 2 assets under the provisions of ASC 820, Fair Value Measurements (“ASC 820”).

During fiscal 2024 and fiscal 2023, there were no transfers between levels.

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Total assets at fair value $ — $ 118,283 $ — $ 118,283

October 1, 2022

September 30, 2023

Equity securities $ — $ 60,055 $ — $ 60,055

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Weighted-average assumptions used to determine benefit obligations:

September 30, 2023 October 1, 2022

September 28, 2024 September 30, 2023

Discount rate 4.80 % 5.70 %

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Weighted-average assumptions used to determine net periodic benefit cost:

September 30, 2023 October 1, 2022

September 28, 2024 September 30, 2023

Discount rate 5.70 % 5.10 %

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The Defined Benefit Plan asset allocations at the dates indicated are as follows:

September 30, 2023 October 1, 2022

September 28, 2024 September 30, 2023

Equity securities 66 % 57 %

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Assets are managed on a total return basis, with dividends and interest reinvested in the account.

The Company expects to make no contributions to its Defined Benefit Plan in fiscal 2024 in accordance with required IRS minimums.

The Company expects to make $ 0.8 million of contributions to its Defined Benefit Plan in fiscal 2025 in accordance with required IRS minimums.

The following benefit payments are expected to be paid out of the Company's pension assets to the plan participants in the fiscal years indicated:

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During fiscal 2024, fiscal 2023 and fiscal 2022, the Company offered a 50 % match on the first 6 % of the employee’s contributions.

However, due to the impacts of COVID-19 and subsequent supply chain constraints, the Company temporarily paused this match from October 2020 through July 2021 and again from August 2022 through December 2022.

However, due to the impacts of supply chain constraints on the Company's operations and cash flows, the Company temporarily paused this match from August 2022 through December 2022.

The plans also provide for an additional discretionary match depending on Company performance.

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Employee Compensation Plans

The MIP compensates certain salaried employees and is derived based upon the "Adjusted EBITDA" (earnings before interest, taxes, depreciation, and amortization, as adjusted) and "Free Cash Flow" metrics.

There was $ 8.3 million in MIP bonus liabilities included in accrued expenses on the Consolidated Balance Sheets at September 30, 2023 and none at October 1, 2022.

Equity Investment in Affiliate

There was $ 17.4 million in MIP bonus liabilities included in accrued expenses on the Consolidated Balance Sheets at September 28, 2024 and $ 8.3 million at September 30, 2023.

Equity Investment in Affiliate(s)

Micro Bird Holdings, Inc.

On October 14, 2009, Blue Bird and Girardin MiniBus JV Inc.

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Blue Bird Micro Bird by Girardin Type A buses are produced in Drummondville, Quebec by Micro Bird.

The Company holds a 50 % equity interest in Micro Bird, utilizing the equity method of accounting as the Company does not have control to direct the activities that most significantly impact Micro Bird’s financial performance based on the shared powers of the venture partners.

venture partners.

The carrying amount of the equity method investment is adjusted for the Company’s proportionate share of net earnings or losses and any dividends received.

At September 30, 2023 and October 1, 2022, the carrying value of the Company's investment was $ 17.6 million and $ 10.7 million, respectively.

During fiscal 2023 and fiscal 2022, Micro Bird did not pay any dividends to the venture partners.

In recognizing the Company’s 50 % portion of Micro Bird net income or loss, the Company recorded $ 7.0 million, $( 4.2 ) million, and $ 0.5 million in equity in net income (loss) of non-consolidated affiliate for fiscal 2023, fiscal 2022, and fiscal 2021, respectively.

Micro Bird's summarized balance sheet information at its September 30 year end is as follows:

At September 28, 2024 and September 30, 2023, the carrying value of the Company's investment in Micro Bird was $ 24.4 million and $ 17.6 million, respectively.

During fiscal 2024, Micro Bird paid each venture partner $5.3 million in dividends.

No dividends were paid by Micro Bird in fiscal 2023.

In recognizing the Company’s 50 % portion of Micro Bird net income or loss, the Company recorded $ 12.1 million, $ 7.0 million, and $( 4.2 ) million in equity in net income (loss) of non-consolidated affiliate(s) for fiscal 2024, fiscal 2023, and fiscal 2022, respectively.

Micro Bird's summarized balance sheet information at its September 30 year end is as follows (denominated in U.S.

Balance Sheet

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Net assets $ 38,082 $ 26,863

Micro Bird's summarized financial results for its three fiscal years ended September 30 are as follows:

Micro Bird's summarized financial results for its three fiscal years ended September 30 are as follows (denominated in U.S.

Income Statement

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21,726 13,244 ( 8,924 )

Clean Bus Solutions, LLC

On December 7, 2023, the Company, through its wholly owned subsidiary, BBBC, and GC Mobility Investments I, LLC, a wholly owned subsidiary of Generate Capital, PBC (“Generate Capital”), a sustainable investment company focusing on clean energy, transportation, water, waste, agriculture, smart cities and industrial decarbonization, executed a definitive agreement (“Joint Venture Agreement”) establishing a joint venture, Clean Bus Solutions, LLC, to provide a fleet-as-a-service ("FaaS") offering using electric school buses manufactured and sold by the Company (“CBS”).

The service will be offered to qualified customers of the Company.

Through CBS, the Company will provide its end customers with turnkey electrification solutions, including a wide product range consisting of, among others, electric school buses, financing of electric buses and supporting charging infrastructure, project planning and management, and fleet optimization.

The Company and Generate Capital will initially have an equal common ownership interest in CBS, and will initially jointly share management responsibility and control, with each party having certain customary consent and approval rights and control triggers.

The parties have each agreed to contribute up to $10.0 million to CBS, as agreed from time to time, for common interests to fund administrative expenses, and up to an additional $100.0 million of capital in the form of preferred interests to fund the purchase, delivery, installation, operation and maintenance of FaaS projects, inclusive of Blue Bird electric school buses and associated charging infrastructure.

Of this amount, the Company has committed to provide up to $20.0 million and Generate Capital has committed to provide up to $80.0 million, with the Company’s aggregate commitment in any one year not to exceed $10.0 million without its consent.

In accordance with the terms of the Joint Venture Agreement, the Company will promote CBS as its preferred FaaS offering for electric school buses and has agreed to not participate as a joint venture partner in any other similar FaaS offering for electric school buses, except as an original equipment manufacturer of buses.

The Company’s obligations do not prevent or limit any activities of its dealers.

CBS has a perpetual duration subject to the right of either party to terminate early upon the occurrence of certain events of default or the failure to achieve certain milestones set forth in the terms of the Joint Venture Agreement.

The Company utilizes the equity method of accounting in recording its interest in CBS as it does not have control to direct the activities that most significantly impact CBS' financial performance based on the shared powers of the venture partners.

amount of the equity method investment is adjusted for the Company’s proportionate share of net earnings or losses and any dividends received.

In connection with the execution of the Joint Venture Agreement, the Company granted Generate Capital warrants to purchase an aggregate of 1,000,000 shares of Company common stock at an exercise price of $25.00 per share during a five-year exercise period (“Warrants”).

Two-thirds of the Warrants were immediately exercisable while the remaining Warrants became exercisable upon Generate Capital satisfying certain funding conditions during our fiscal 2024.

The exercise price and the number of shares issuable upon exercise of the Warrants are subject to adjustment in the event of a recapitalization, stock dividend or similar event.

The Company recorded the $7.4 million fair value of the Warrants upon issuance as permanent equity within additional paid-in capital on the Consolidated Balance Sheets and is not required to subsequently record changes in fair value as long as the Warrants continue to be classified within stockholders' equity.

Additionally, since the Warrants were provided in exchange for an investment in CBS, the Company recorded the cost of its investment based on the fair value of the Warrants upon issuance, which increased the balance of equity investment in affiliate(s) on the Consolidated Balance Sheets by a corresponding $7.4 million.

During fiscal 2024, the Company also made a $0.6 million contribution to CBS, which was recorded to equity investment in affiliate(s).

CBS paid no dividends during fiscal 2024.

In recognizing the Company’s proportionate percentage of CBS' net income or loss, the Company recorded $(0.3) million in equity in net income (loss) of non-consolidated affiliate(s) for fiscal 2024.

At September 28, 2024, the carrying value of the Company's investment in CBS was $7.7 million.

Accumulated Other Comprehensive Loss

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Income taxes ( 3,173 ) ( 3,173 )

Balance, October 1, 2022 $ ( 41,930 ) $ ( 41,930 )

Balance, September 30, 2023 $ ( 31,884 ) $ ( 31,884 )

Other comprehensive income, gross 6,507 6,507

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and Barclays Capital Inc., as representatives of the several underwriters and American Securities LLC and Coliseum ("2023 Selling Stockholders"), pursuant to which the 2023 Selling Stockholders agreed to sell 5,175,000 shares of common stock, including the sale of 675,000 shares pursuant to the underwriters’ exercise of their over-allotment option, at a purchase price of $ 20.00 per share.

On September 11, 2023, the Company entered into another underwriting agreement with Barclays Capital, Inc., and the Selling Stockholders, pursuant to which the Selling Stockholders agreed to sell 2,500,000 shares of common stock, at purchase price of $ 21.00 per share (collectively, "Offerings")

On September 11, 2023, the Company entered into another underwriting agreement with Barclays Capital, Inc.

and the 2023 Selling Stockholders, pursuant to which the 2023 Selling Stockholders agreed to sell 2,500,000 shares of common stock, at purchase price of $ 21.00 per share (collectively, the "2023 Offerings").

The 2023 Offerings were conducted pursuant to prospectus supplements, dated June 7, 2023 and September 11, 2023, respectively, to the prospectus, dated December 22, 2021 included in the Company’s registration statement on Form S-3 (File No.

333-261858) that was initially filed with the SEC on December 23, 2021.

333-261858) that

was initially filed with the SEC on December 23, 2021 (the "December 2021 Prospectus").

The 2023 Offerings closed on June 12, 2023 and September 14, 2023, respectively.

Although the Company did not sell any shares or receive any proceeds from the Offerings, it was required to pay certain expenses in connection with the Offerings, which totaled $ 7.4 million during fiscal 2023, with no similar expense recorded during fiscal 2022.

The $ 7.4 million of expense is included within other (expense) income, net on the Consolidated Statements of Operations for fiscal 2023.

Subsequent Events

2023 Credit Agreement

On November 17, 2023 (the “2023 Closing Date”), Borrower executed a $ 250.0 million five-year credit agreement with Bank of Montreal, acting as administrative agent and an issuing bank;

several joint lead arranger partners and issuing banks, including Bank of America;

and a syndicate of other lenders (the "2023 Credit Agreement").

The credit facilities provided for under the 2023 Credit Agreement consist of a term loan facility in an aggregate initial principal amount of $ 100.0 million (the “2023 Term Loan Facility”) and a revolving credit facility with aggregate commitments of $ 150.0 million.

The revolving credit facility includes a $ 25.0 million letter of credit sub-facility and $ 5.0 million swingline sub-facility (the “2023 Revolving Credit Facility,” and together with the 2023 Term Loan Facility, each a “2023 Credit Facility” and collectively, the “2023 Credit Facilities”).

A minimum of $ 100.0 million of additional term loans and/or revolving credit commitments may be incurred under the 2023 Credit Agreement, subject to certain limitations as set forth in the 2023 Credit Agreement, and which additional loans and/or commitments would require further commitments from existing lenders or from new lenders.

Borrower has the right to prepay the loans outstanding under the 2023 Credit Facilities without premium or penalty (subject to customary breakage costs, if applicable).

Borrowings under the 2023 Term Loan Facility, which were made at the 2023 Closing Date, may not be re-borrowed once they are repaid while borrowings under the 2023 Revolving Credit Facility may be repaid and reborrowed from time to time at our election.

The 2023 Term Loan Facility is subject to amortization of principal, payable in equal quarterly installments on the last day of each fiscal quarter, commencing on March 30, 2024, with 5.0 % of the $ 100.0 million aggregate principal amount of all initial term loans outstanding at the 2023 Closing Date payable each year prior to the maturity date of the 2023 Term Loan Facility.

The remaining initial aggregate principal amount outstanding under the 2023 Term Loan Facility, as well as any outstanding borrowings under the 2023 Revolving Credit Facility, will be payable on the November 17, 2028 maturity date of the 2023 Credit Agreement.

The 2023 Credit Facilities are guaranteed by all of the Company’s wholly-owned domestic restricted subsidiaries (subject to customary exceptions) and are secured by a security agreement which pledges a lien on virtually all of the assets of Borrower, the Company and the Company’s other wholly-owned domestic restricted subsidiaries, other than any owned or leased real property and subject to customary exceptions.

The $ 100.0 million of 2023 Term Loan Facility proceeds and $ 36.2 million of 2023 Revolving Credit Facility proceeds that were borrowed on the 2023 Closing Date were used to pay (i) the $ 131.8 million of Term Loan Facility indebtedness outstanding under the Amended Credit Agreement (ii) interest and commitment fees accrued under the Amended Credit Agreement through the 2023 Closing Date and (iii) transaction costs associated with the consummation of the 2023 Credit Agreement.

Under the terms of the 2023 Credit Agreement, Borrower, the Company and the Company’s other wholly-owned domestic restricted subsidiaries are subject to customary affirmative and negative covenants and events of default for facilities of this type (with customary grace periods, as applicable, and lender remedies).

Borrowings under the 2023 Credit Facilities bear interest, at our option, at (i) base rate or (ii) SOFR plus 0.10 %, plus an applicable margin depending on the TNLR of the Company as follows:

Level Total Net Leverage Ratio ABR Loans SOFR Loans

I Less than 1.00x

0.75 % 1.75 %

II Greater than or equal to 1.00x and less than 1.50x

1.50 % 2.50 %

III Greater than or equal to 1.50x and less than 2.25x

2.00 % 3.00 %

IV Greater than or equal to 2.25x

2.25 % 3.25 %

Pricing on the Closing Date was set at Level III until receipt of the financial information and related compliance certificate for the first fiscal quarter ending after the 2023 Closing Date.

Borrower is also required to pay lenders an unused commitment fee of between 0.25 % and 0.45 % per annum on the undrawn commitments under the 2023 Revolving Credit Facility, depending on the TNLR, quarterly in arrears.

The 2023 Credit Agreement also includes a requirement that the Company comply with the following financial covenants on the last day of each fiscal quarter through maturity:

(i) a pro forma TNLR of not greater than 3.00:1.00 and (ii) a pro forma fixed charge coverage ratio (as defined in the 2023 Credit Agreement) of not less than 1.20:1.00.

Joint Venture

The service will be offered to qualified customers of the Company.

Through the Joint Venture, the Company will provide its end customers with turnkey electrification solutions, including a wide product range consisting of, among others, electric school buses, financing of electric buses and supporting charging infrastructure, project planning and management, and fleet optimization.

The Company and Generate Capital will initially have an equal common ownership interest in the Joint Venture, and will initially jointly share management responsibility and control, with each party having certain customary consent and approval rights and control triggers.

The parties have each agreed to contribute up to $ 10.0 million to the Joint Venture, as agreed from time to time, for common interests to fund administrative expenses, and up to an additional $ 100.0 million of capital in the form of preferred interests to fund the purchase, delivery, installation, operation and maintenance of FaaS projects, inclusive of Blue Bird electric school buses and associated charging infrastructure.

Of this amount, the Company has committed to provide up to $ 20.0 million and Generate Capital has committed to provide up to $ 80.0 million, with the Company’s aggregate commitment in any one year not to exceed $ 10.0 million without its consent.

In accordance with the terms of the Joint Venture Agreement, the Company will promote the Joint Venture as the Company’s preferred FaaS offering for electric school buses and has agreed to not participate as a joint venture partner in any other similar FaaS offering for electric school buses, except as an original equipment manufacturer of buses.

The Company’s obligations do not prevent or limit any activities of its dealers.

The Joint Venture has a perpetual duration subject to the right of either party to terminate early upon the occurrence of certain events of default or the failure to achieve certain milestones set forth in the terms of the Joint Venture Agreement.

In connection with the execution of the Joint Venture Agreement, the Company granted Generate Capital warrants to purchase an aggregate of 1,000,000 shares of Company common stock at an exercise price of $ 25.00 per share (“Warrants”), during a five-year exercise period.

Two-thirds of the Warrants are immediately exercisable;

the remaining Warrants will become exercisable upon certain funding conditions being satisfied.

The exercise price and the number of shares issuable upon exercise of the Warrants are subject to adjustment in the event of a recapitalization, stock dividend or similar event.

On December 14, 2023, the Company entered into an underwriting agreement with BofA Securities, Inc.

and Barclays Capital Inc., as representatives of the several underwriters and American Securities LLC ("2024 Selling Stockholder"), pursuant to which the 2024 Selling Stockholder agreed to sell 2,500,000 shares of common stock at a purchase price of $25.10 per share.

On February 15, 2024, the Company entered into an underwriting agreement with Barclays Capital Inc., as representative of the several underwriters and the 2024 Selling Stockholder, pursuant to which the 2024 Selling Stockholder agreed to sell 4,042,650 shares of common stock at a purchase price of $32.90 per share (collectively, the “2024 Offerings”).

The 2024 Offerings were conducted pursuant to prospectus supplements, dated December 14, 2023 and February 15, 2024, respectively, to the December 2021 Prospectus.

The 2024 Offerings closed on December 19, 2023 and February 21, 2024, respectively.

Although the Company did not sell any shares or receive any proceeds from the 2024 Offerings or 2023 Offerings, it was required to pay certain expenses in connection with these transactions that totaled approximately $ 3.2 million and $7.4 million during fiscal 2024 and fiscal 2023, respectively.

These expenses are included within other (expense) income, net on the Consolidated Statements of Operations.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data